Traders and analysts expect cash trade to remain steady this week as feeders hold out for more money amid tightening cattle supplies despite shrinking margins for beef packers pinched by falling wholesale beef prices.
Cash trade was steady last week with sales Thursday at $123, however Reuters reports feeders stood their ground on Friday waiting for higher bids.
Cash cattle trade for the week ending September 13th gained 12 cents. Our panel experts predicts steady gains to continue as this week’s Monday Market Sentiment is 26 cents higher, reaching $123.31 per cwt.
The Monday Market Sentiment is a forecast of the upcoming weekly cash trade (5-Area weighted average price) prices reported by the USDA. Last week the USDA announced that cash trade for the week ending September 13th was 123.05, an increase of 12 cents above the previous week.
Although margins remain negative, feeders have seen profit margins improve over the past month while packer margins have fallen lower over the same time frame. Trade will look to beef prices and demand for direction this week, but analysts believe cash trade has set a bottom and higher prices lie ahead.
Beef packers will be hesitant to pay higher prices if they continue to see negative margins, but it’s the feedlot’s turn to make a profit with the fall season only a week away. Choice beef prices recovered Monday, ending a recent trend lower, however Select cuts continue to fall, losing another quarter on Monday.
Each week the Cattle Trader Center, on behalf of Vance Publishing, awards a $100 gift certificate from Cabela's to the industry leader whose forecast comes closest to the 5-Area cash trade number reported by the USDA. The most recent winner was Marshall Jensen, Snake River Cattle Feeders.